Valuing Improved Water Quality in the Chesapeake Bay Using Stated Preference Methods

Comment on the Stated Preference study to collect information on Willingness to Pay (WTP) for Chesapeake Bay Total Maximum Daily Load (TMDL) July 29, 2013 National Center for Environmental Economics Office of Policy (1809T) Environmental Protection Agency 1200 Pennsylvania Ave. NW Washington, DC 20460 Re: Willingness to Pay Survey for Chesapeake Bay Total Maximum Daily Load: Instrument, Pre-test, and Implementation". Docket ID Number EPA-HQ-OA-2012-0033 The environmental non-profit advocacy organization Natural Resources Defense Council (NRDC) submits the following comment to the U.S. Environmental Protection Agency on undertaking a stated preference project to improve estimates of benefits associated with Chesapeake Bay water quality changes under the TMDL. The use of Choice Experiments, where individuals are asked to choose their preferred alternative from a choice set made up of different attributes, including cost is a versatile and a powerful methodology for estimating the monetary value of environmental changes (Hanley et al. 2002). There are several valuation studies that have demonstrated the need for including these non-use values in order to capture the total economic value of environmental goods. For Example, Carson (1995) noted some 2000 papers or studies where empirical estimates of non-use values have been made. Concentrating only on on-site users of resources, Chesapeake Bay waters in this case, the benefit estimates will largely reflect only the values of the users and consist of mostly direct use values. Consequently, potentially large values held by the remainder of the population, i.e., the non-users and their values are not captured. It is well known that non-use values can only be measured using stated preference methods. Hence, the research is an important step toward providing a comprehensive estimate of the benefits of water quality improvement in the study region. Limburg et al. (2002) notes that the complex nature of the water ecosystem often invokes denying any valuation of the ecosystem services through subjective preferences. However, the use of endpoint survey, i.e., using ecological endpoints that are characterized as concrete, tangible, and measurable (Boyd 2007) is an important step toward using science to evaluate policy. Moreover, the choice experiment approach also helps address the issue of marginality, where small changes in the attributes lead to changes in economic value. Such knowledge of the marginal values of the attributes is useful to link ecosystem research with policy-making (Fisher et al. 2008). NRDC commends the EPA for its use of economic tools to value environmental goods and encourages applying such principles to policy design. Sincerely, Naveen Adusumilli Science Fellow, Economist Natural Resources Defense Council References Boyd, J., 2007. The endpoint problem. Resources 165, 26–28. Carson, R.T. (1995). Contingent Valuation: A Comprehensive Bibliography and History, Edward Elgar, Northampton, MA. Fisher, B., et al., 2008. Ecosystem services and economic theory: integration for policy relevant research. Ecological Applications 18, 2050–2067. Hanley, N., Mourato, S., Wright, R.E., 2001. Choice modeling approaches: a superior alternative for environmental valuation? Journal of Economic Survey 15, 435-462. Limburg, K.E., O'Neill, R.V., Costanza, R., Farber, S., 2002. Complex systems and valuation. Ecological Economics 41, 409–420.